TL;DR
Supersonic flight has not been available to commercial travelers since the retirement of the Concorde in 2003. Driven by the dream of reviving commercial supersonic travel, a new crop of supersonic startups has emerged that seeks to use modern technologies to make supersonic flight accessible to the masses. Transpacific travel has grown rapidly over the last few decades, suggesting that there may be a robust starter market for commercial supersonic travel. In addition, the emerging technology of low-boom supersonic flight (source) could eventually allow for supersonic planes to travel safely over populated regions and dramatically grow the total addressable market for supersonic flight. However, despite these optimistic signals, the recent collapse of once high-flying startup Aerion raises hard questions about the feasibility of today’s supersonic companies.
Boom Supersonic
Boom Supersonic was founded in 2014 and incubated in Y Combinator in 2016. It has since raised $241 million in funding from prominent VC firms to build a supersonic passenger jet (source). Boom’s high-powered backing and strong media profile has made it the current leader in the race to return supersonic jets into active passenger service. Boom is currently working on a ⅓ scale test plane, the XB-1, which it plans to fly on a test flight by the end of the year (source). The company plans to break ground on a new US based factory in 2022 and start building its first Overture planes in 2023. Boom initially plans to target transocean routes with its aircraft instead of directly aiming for commercializing low boom technologies. That said, Boom’s founders haven’t shied away from big goals, notably the goal of achieving $100, 4-hour trips to anywhere in the world (source).
Aerion
Aerion was founded in 2004 with the goal of building a supersonic customer jet. Aerion formed an impressive array of partnerships with companies like Boeing, General Electric, and Berkshire Hathaway and claimed an impressive backlog of $11.2 billion in sales for its planned supersonic jet (source). Despite these milestones, on May 21st, 2021, Aerion abruptly announced that it would be shutting down due to inability to raise the capital necessary to fund continued work on its planned plane. Aerion’s CEO announced that it would require between $1-4 billion in capital to develop its supersonic passenger jet, an heavy capital commitment that investors proved unwilling to make (source).
Lockheed Martin X-59 QueSST
Lockheed Martin, in partnership with NASA, is working on a program to test the safety and viability of low boom technology for commercial flights. Lockheed is working on manufacturing an experimental aircraft, the X-59, which will be used to test the maturity of these technologies (source).
Exosonic
Exosonic is a new Y Combinator backed startup founded in June 2019 that aims to commercialize X-59 style low boom technology directly instead of building a more traditional supersonic aircraft (source). At present, Exosonic is young and unproven, but worth keeping an eye on especially if X-59’s tests go well.
Discussion
Funding rounds for deep tech companies can prove treacherously dangerous as Aerion’s recent shutdown demonstrates. A talented founding team can usually raise a seed round on the strength of their concept and early prototypes, but then stumble at the Series A or Series B rounds since slowdowns and delays are inevitable during deep tech development. Privately, founders often talk about a chasm that separates early seed funding from eventual commercial success for deep tech companies. Once enthusiastic investors and once excited customer prospects stop returning calls as the complexities of commercializing a new technology become painfully apparent.
For deep tech analysts and enthusiasts, Aerion’s recent collapse provides a few lessons. The first is to not weigh partnerships too heavily without details. The term “partnership” can cover a whole range of interactions between a startup and a larger firm, ranging from a simple engagement worth a few thousand dollars to a multi-billion dollar investment. Aerion boasted an impressive array of partnerships, but as its collapse makes clear, these connections could not provide the capital necessary to survive. The second lesson is to be careful with accounting. Aerion claimed $11.2 billions in sales backlog, but these sales were likely statements of interest rather than strong contracts with preliminary payments and guaranteed milestones. The third lesson is to take ambitious claims with considerable skepticism. In March 2021, shortly before its collapse, Aerion announced plans for a new Mach 4+ commercial airline that could travel from LA to Tokyo in 3 hours (source). Aerion also claimed to have invented “boomless cruise” technology on the path to achieving carbon neutral flight. The unwillingness of investors to continue backing Aerion suggests that these high-flung claims did not have much substance behind them.
Careful analysis of assets and partnerships is needed to gauge a deep tech company’s position. Unfortunately, the only way to access such information is by looking inside a startup’s books and hiring seasoned financial and technical due diligence experts who can vet whether claims are realistic (Full Disclosure: Deep Forest Sciences performs technical due diligence services for deep tech investors.) Given Aerion’s high profile failure, Boom Supersonic will need to prove that its technology is viable. The success or failure of Boom’s XB-1 prototype will signal whether Boom has real fundamentals or whether it, like Aerion, is making claims that it cannot deliver. The results of NASA’s X-59 tests will test the feasibility of low-boom supersonic technology which will affect investor estimates of the total addressable market for next generation supersonic aircraft. At present, the supersonic aircraft market is still embryonic and considerable effort will be required before new planes are brought to market. We will keep an eye on the space and report back in future issues.
Highlights for the Week
https://www.wsj.com/articles/intelligence-on-sick-staff-at-wuhan-lab-fuels-debate-on-covid-19-origin-11621796228: New intelligence raises more questions about whether Covid-19 was the result of a lab leak from a PRC research lab.
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About
Deep Into the Forest is a newsletter by Deep Forest Sciences, Inc. We’re a deep tech R&D company specializing in the use of AI for deep tech development. We do technical consulting and joint development partnerships with deep tech firms. Get in touch with us at partnerships@deepforestsci.com! We’re always welcome to new ideas!
Credits
Author: Bharath Ramsundar, Ph.D.
Editor: Sandya Subramanian